tv Bloomberg Markets Asia Bloomberg February 9, 2020 9:00pm-11:00pm EST
oil and gas see demands start to slide. how low can they go? ♪ haidi: the prevailing theme is monitoring the latest out of the coronavirus as we get these stabilization's when it comes to infections. istors, everyone hoping this the start of a stabilizing trajectory after we had to shut down and quarantine across many parts of china, as well as many other economies around the region. but very interestingly, we had the completely consumer priced inflation data out of china and it really does make the job of the pboc ever harder. shery: no wonder we are seeing stock markets react to that.
we saw losses accelerating after we got the cpi number, growth of more than 5%, accelerating the faster since october 2011. we have pork prices gaining 116%, and we saw more pressure across the chinese markets. let's get the latest on the markets with sarah ponczek. sarah: another risk off session but benchmarks are off. down near half a percentage point. if you look at where the benchmark was pre-coronavirus, we're roughly 7.5% of those markets. senger, the hong kong hang down 1% were so, the nikkei lower. the s&p 500 futures climbing their way to trade relatively unchanged. this does come after the hang and s&p 500kkei, last week all had their best week since mid-december. let's look at the board.
it's showing us a decidedly more optimistic picture, interestingly enough. if you look at the aussie dollar higher today, the best performing g10 currency at the moment. meanwhile, you look at the safe haven of the yen, for example, dollar-yen, you look at the dollar higher versus the yen, the yen declining.more of a risk on feel as it stands right now. we'll see if this does hold. 158.nged, holding at we're not seeing the same bids for bonds. haidi: interesting the slight shift we're seeing. we'll get more on the top story, the death toll on the coronavirus has reached 910 as voices growing concern over the spread of the d's from people
with no travel history to china. the pboc is stepping up efforts to support businesses hit by the outbreak. let's bring in yvonne man, who's in hong kong, and selena wang in beijing. take us through this latest development. when you look at what economists is looking at, what the who saying, they say it could be the tip of the iceberg and everyone is watching transmissions and infections outside of china now. yvonne: right, and you mentioned the death toll now at 910, at least 40,000 cases reported around the world, and both of those numbers now have surpassed what we saw back in 2003 during the sars epidemic. we saw fresh cases in the likes of singapore, japan, and europe. there's a case of a super spreader after we saw cases in france, spain, and the u.k.
britishces back to a man who attended a conference in singapore and came into contact at a.p. -- with people at a french ski resort. this shows the challenges to contain this virus once it carries outside the globe. very similar pattern to what we saw during the sars epidemic when one epidemic -- infected dr. infected multiple people at one time. there goes the challenge there. he also talk about signs of stabilization we've seen. cases, came to confirmed it only grew 8% over the weekend, the lowest yet. suspected cases went down quite a bit, as well. perhaps we are getting closer to that peak. medical experts say it could be mid-to-late february when we hit the inflection point. a lot of remaining questions by then, how many people will be contracted. they are saying it could be one
to 20 that could be contracted. that's about 500,000 people by then. shery: what about the quarantine measures we've seen in hong kong, not to mention the cruise ships that have been stranded? we're hearingso about the quarantine measures. that helped bring down the number of people from china arriving in hong kong, the government coming out with a statement saying the flow of cross-border has come down by 75%. this is happening at the three border checkpoints that remain open in the airport and the singin court. at least 918 people who have been quarantined, most of which are hong kong residents. this after we saw a jump up in cases in the city, as well, total of 36, but the numbers did jump by a third in the latest case, happening with a family of nine who contracted the disease after they went out for barbecue
meals. there is concern of local transmission but not quite a community out rake just yet. haidi: we are looking at the pboc's move. how much of a big deal is it? what are they intending to do with this? >> today we see the start of the relent ash selina: today we see the start of relenting funds. it will be an expedited approval process. several local banks qualify for those loans. seeing pboc step up in but they measures, targeted measured approach to save u.s., they said it will be forthcoming but it's cautious not to add more stimulus that will add to financial risk.
i want to point out we did see 2011,mbers come in in mostly by pork price surges. he also have economists lowering forecast for economic growth even further. ubs estimating growth will slow in the first quarter from 6% of last year. goldman sachs reducing their forecast to 4%. the biggest hit to the economy is being felt in the center of the outbreak. it is having ripple effects around the globe, given the industrial powerhouse of china and sweden. hundreds of manufacturing get their supply chains disrupted. this is the place for global and auto manufacturers not producing the part but actual cars here. really significant ripple effect you are seeing from the break center. shery: many saying the inflation
pop we saw today with the first positive number in seven months, won't last long given everything you mentioned. not to mention, cpi numbers also jumping. selina: right, just mentioned those numbers jumping. strong demand and the lunar new year holiday being a bit later. i want to stress the impact the coronavirus on the banking sector. there were other key lenders, as well, and the banks are being asked to fulfill their civic duty by bailing out these small businesses, rolling over debt and they are at the frontlines of trying to absorb the shock. we have s&p estimating the worst case scenario could cause bad debt to balloon ¥5.6 trillion, already adding to the massive
nonperforming loans chinese banks are sitting on. i want to point out there's a big difference between the 2003 today, and sars and the since there isn't enough capital at banks to support a banking led stimulus. they don't have the same ability to replenish capital now that profitability is trending downward. haidi: yvonne man and selina wang in hong kong and beijing, respectively. keep up-to-date with the coronavirus story by running this function. you can get the latest figures, as well as headlines from the bloomberg news room. also taking a look at how specific companies and stocks may be exposed. let's get you to first word news now with su keenan in new york. su: we're going to start in washington, where the report suggests the trump administration plans to reduce the amount of money it wants for
border wall construction. that's on the border between the u.s. and mexico. dow jones it says the white house will request $2 billion from congress later monday, which is significantly less than the amount called for a year ago. the lower figure is set to reflect the fact that much of the cost for the portable has been met by shifting money from the military resources. meanwhile, the political fate of india's capital new delhi will be revealed tuesday, when state election results are announced. almost 15 million voters are choosing 70 members of the legislative assembly. prime minister modi's party faces an uphill struggle to reclaim the region in the area, which is seen as a major test at the ballot box after his controversial religion-based citizenship law. british airways set a record for the fastest subsonic, transatlantic crossing by a commercial passenger plane. the 747 flight touched down in heathrow after leaving jfk in
four hours, 56 minutes earlier. 800 15 miles per hour, or 1300 kilometers per hour, supersonic concorde's used to transfer the atlantic, and about three hours, two hours less than this new record. boris u.k., from minister johnson is prepared to announce a boost in infrastructure spending focused on the north of anglin. this follows campaign pledges he made during the election. the plan will include spending on 5g networks in rural areas, as well as investment in public transportation. pfts say johnson will give the green light to the much delayed hs2 high-speed train line this week. global news, 24 hours a day on air and on quicktake by bloomberg, powered by more than 2,700 journalists and analysts in more than 120 countries.
percentage points of china's growth. 2003, but.7% in dropped to 9.1% in the second. sars hurt china and its neighbors. with a small weight limited the global impact. back in 2003, chinese gdp was 4% of the global total. now it's 17%, which means any drop now will hit harder. economists have drawn up scenarios for the potential impact. the latest outbreak occurred during the lunar new year holiday, a peak time for consumption in china. and reduce spending won't be recouped. current travel restrictions are also wider than those imposed in 2003. so if the outbreak is contained quickly, growth could recover later in 2020. that would put full-year growth at 5.7%, to tense of 1% below bloomberg's -- 2/10 of 1% below bloomberg's original forecast. but if it persists, damage will be more severe, and neighbors will be hit harder, especially
in south korea and vietnam. about mend more versus microbes in bloomberg businessweek. speaking of the economy, our next guest expects the disruption from the virus to lead to a 1% quarterly decline of gdp. moody's analytics chief economist joins us from singapore. great to have you with us. seeing moreourse, measures from the pboc to try to help the economy, and we have heard despite all these efforts from the banking regulator, that because of this health crisis, we could see a spike in bad loans. this gtv chart on the blue brick showing how much debt china already has. how detrimental could this be to the financial markets if we actually see this increase in nonperforming those -- nonperforming loans? yeah, this is a problem
for china, and in a sense, has been a long time coming. it's over 300%. and that's the highest of any developing economy in the world. it's also been rising faster than any developing economy in the world. so, as long as the economy continued to grow, something that was manageable, and indeed the policymakers in china were working to manage debt back in 2017, early 2018, when the economy began to slow. but it adds to the risk and there's that much more risk that there could be some difficulty in the banking system going forward as the financial conditions worsen. shery: we have seen beijing try to get a handle on the regional banking crisis, right? so how much worse candace get now? -- can this get now? steven: really, it depend on how
long the impact of the coronavirus lasts. at the economic impact, our baseline case, we have a baseline forecast at about 5.3 percent gdp growth this year. and that assumes we get some stability by the end of this month on both the spread of the virus and on the economy operating again. if that's the case, i think china will be ok. but if it extends beyond february and goes to march, the risk rises even further. to get youreen thoughts on the latest inflation numbers because we had poor inflation driving cpi up 5.4%, and we also have been an expected rise when it comes to surprises. just take a look at port prices on this chart. i'm wondering, you look at the numbers and we are expecting more volatility when it comes to inflation numbers.
we had chinese ute -- new year, coronavirus, but this unexpected mix, where you get huge prices in some things, deflation in other products, how does the pboc manage this? and does this present yet another challenge as it tries to provide targeted stimulus to the economy? steven: it is a challenge. i think the pboc has to look a little bit beyond the rising pork prices. there is some potential it will come down simply because imported supplies are likely to rise and supplies that had been in frozen storage are now hitting the market. that may help. i think the previous he has to look at pork prices to manage its expectations down the road. there is bound to be more volatility, particularly as we ,ome out of the lunar new year but also as households begin emerging, hopefully from their
homes, as the coronavirus eases. they might spend more to restock supplies in the house. there could be some additional spikes before we actually have seen easing in pork prices going forward. volatility is the name of the game for pork, and topline consumer prices, and best to be looking at core inflation as a better indication of the issue of inflation in the economy. guess in terms of that reemergence from the down in spending, but do you expect to see, in the second quarter, the rebuilding or recovery, if you will, in infrastructure spending and fiscal spending, perhaps not just in china, but elsewhere in the region? does that provide a boost to growth in the second half of the year? see,n: i think we will putting lily fiscal spending, coming to the rescue -- jiggly fiscal particularly fiscal
spending in the early part of the year. we start to restart construction projects will help. see somebably going to fiscal stimulus in southeast asia, malaysia, singapore. i think it's very likely. indonesia and the philippines already have rather a strong fiscal plans in place right now. waits the most likely governments will begin to recharge the economies. a little bit of monetary policy but they are already fairly low, policy rates are record low. there is not a lot of space to move and there have been recent moves in the last couple of weeks, and that may it for a while. shery: for all of these economies, very important to what happens to factory deflation in china and how that's exported to other regions. we have seen, for the first time in seven months, ppi come into
positive. how long can this momentum be sustained when we have the factories being idle because of the outbreak? steven: well, it's going to take a while for the factories to get back online, so there is some potential for ppi to rise further. you know, the new year holidays were extended through last week, but the next two weeks will be really critical in terms of understanding whether factories can actually get back online or not, or how quickly they can get back to full production. one factor that may be in the way is that a number of school closings has been extended through the next week or through the end of the month, and it could be difficult for some workers to get back to work if indeed their kids are not in school. shery: what does this mean also for the commodities market? we have seen a slight turnaround, but was that
premature, given that we really don't know what's happening with these factories in china? steven: yeah, i think at least through the end of this month, we'll likely see continued softness in commodity markets. it's hard to come up with a good, firm forecast in terms of where demand will be, given the uncertainty of the coronavirus. given that, i think prices are simply going to remain at least at their current levels, if not perhaps a little bit lower going forward. haidi: really appreciate your steven, joining us out of singapore. be sure to keep up-to-date on this developing coronavirus story. you can run the function under bloomberg. there, you'll find our quicktake landing page. they have the latest figures from the cdc, headlines from the newsroom, and has specific companies and stocks may be exposed. ♪
haidi: let's get the latest business flash headlines for you. facebook is pledging to improve security after a lawsuit that blames the company for a data breach in 2018 that exposed the personal data of 29 million users. the social network says it will check more frequently for suspicious activity involving access tokens. these are the keys that allow users to access their account. shery: top apple supplier foxconn says is working with health authorities to limit the coronavirus spread and we'll introduce safety measures to present -- protect staff. the company has asked workers to stay-at-home after the extended lunar new year break in order to minimize the health risk. the government is evaluating whether foxconn shenzhen has the required measures in place. we'll beming up,
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>> it is 10:20 9 a.m. in hong kong and shanghai, 9:29 in new york, here are your first word headlines. we start with the latest on the coronavirus concern. the world health organization is leading an international team of medical experts to china, in order to combat the spread of the virus. more than 900 people have died there, and the number of cases has passed 40,000. more cases reported over the weekend in singapore, japan and europe. china says it is spending $10 billion to control the outbreak, and is calling for more global support for medical supplies. meanwhile, that cruise liner
quarantined and hong kong you can send -- due to concerns of contagions has been released after all passengers and crew were found free of the virus. ony stopped in the city wednesday after three chinese passengers who left the ship earlier were found to have the virus. the hong kong port officials say tests on crew members completed ahead of schedule and all came out negative. to the u.k., boris johnson is announcing a boost in infrastructure spending in the north of england, following campaign promises. it will include spending on five-day network -- 5g networks in rural areas and transportation. johnson will also give the green light to the much delayed, highly anticipated high-speed rail line this week. ireland faces uncertainty after its election results were set to
leave the traditional two-party structure there in chaos. the polls show a virtual dead two candidates. the former political wing of the irish republican army presented itself as a leftist alternative to the centrists that have dominated ireland for decades. global news 24 hours a day on air and on quick take on -- by bloomberg. powered by more than 2700 journalists and analysts in more than 120 countries good -- countries. >> small caps in china at a one month high. get the latest on the markets with sarah. despite the turnaround in the mainland markets broadly across asia, still under pressure. i don't understand why because there doesn't seem to be anything particularly new other
than more coronavirus cases and the death toll climbing. often can be difficult to assign day-to-day moves to a single report or headline. when you look at the news flow we have seen today, we have almost in disputing views on one hand, you have cases climbing and you see the death toll climbing, but there have also been reports that maybe we are on the way to a peak in the coronavirus cases later in the month. on the negative side, you have the idea that we are not sure when factories will be coming back online. divineeally difficult to any one headline or report to blame, or the mood we are seeing today. it is notable that we are very of thef the loads session and we've seen elevated volumes. moving for -- 500 higher. these are not within markets
being traded. what is the positioning we are seeing given some conflicted messaging and a real inability to predict what will happen next in the crisis? sarah: there is a lot of unpredictability but we can look at data across the bloomberg from last week. it is extremely risk on and still very much pro-u.s.. even though coming into the year we heard time and again it will be time for international markets to out perform emerging see love for u.s. buzz. we have some etf's that track the 500, a combined $13 billion last week. there could be some asset , but records inflows for the two, and the that trackshe fund
the nasdaq, seeing major inflows as well. on the outflow side where people are trying to get out, interestingly enough, japan, and japan, and small caps. investor still favoring the u.s. >> what's the message from the commodity complex? sarah: a strong turnaround in the commodity complex as well. when they started trading this morning, oil under pressure, wti following -- falling below $50 a barrel again. copper was lower as well. but we've seen a strong turnaround and we've seen gold move from gains to losses and copper, wti, brent, crude oil, in the green. we should mention that there are reports opec will not be holding an emergency meeting and demand is still very much in focus and in question. for now, a little bit of a reprieve. >> all right, sara taking a look
at the commodity and energy markets viewed even before the latest coronavirus out rick -- outbreak, another menace for the global energy industry, the warmest winter anyone can remember. it is producing heating demand for oil and gas, and a climate activist finds a poetic justice in energy markets suffering from global warming caused by fossil fuels. morgan's with j.p. regional head of energy. destructionl demand is coming out of the coronavirus, there is an impact on china and export, lower pricing and demand around the region. how bad is it? ourp morgan recently cut global demand forecast, we cut it roughly by one third, and
that predominately came from china grows. per day00,000 barrels of oil product demand growth in china, and we lowered that by 17,000 per day. i think apart from the virus impact, i think you are right about the mild winter. certainly in this part of the , quite a mild winter, and it has impacted heating demand as well. that was a little bit after where we cut our demand forecast. >> is a recoverable? particular when you take into account the inevitable spending both on a personal level but also a government level that we are expecting where we get to the other side of this crisis. scott: i think there's a lot of uncertainty. jp morgan published a lot in terms of statistics and the virus peaking and impacts. i think there is a consensus view now that the second half is
a little better than the first half in terms of demand. i still think there's a lot of uncertainty around that for now. >> hmm. what are we seeing in terms of the long run oil price? because we tend to focus on the short-term but i wonder if there is more upside or downside risk. scott: that's a good question. we can talk about near turmoil impacts but something jp morgan started to publish, or at least anecdotal data we have got, is oil analystsgan use $60 print in their modeling long-term, but increasingly we see upside risk of that. if i look at fiscal breakevens for opec, they increase about $10 per barrel from when we did this 10 years ago -- two years ago. we've obviously seen a slowdown in spending, declines in
spending, u.s. shale, and it feels as if the u.s. shale growth story is getting over and the focus is pre-cash and proving cash returns to shareholders. then we had at least five years, maybe coming into six now, where there hasn't really been much spending in the oil and gas world. you've got existing oil fields where decline rates are not getting any better, and if you look at incremental's, that might not be enough to arrest some of the existing field supply. it is sort of pointing to the fact that the forward occurred -- forward curve is undervalued and you could see the market gradually increasing long run oil prices, which would accentuate the gap between growth stocks and the oil equity stocks that are value yield type plays. >> if you look at what is
happening in the u.s. on the bloomberg, oil stocks have been lagging wti prices. is this a similar case in asia, and where can we find that value? scott: absolutely, you are right. i think funds we speak to still are pretty much underweight energy. is anme goes for here, it earnings growth driven market. refinersarter numbers, missed, chemical names missed, we were talking about downside demand. you can't really say there is any sort of earnings growth at least for the oil stocks here, but they are showing good value still, and as long as they are even menuing -- managing $60 oil, the trying to sustain that dividend yield. energy it comes to china companies, the upcoming season,
they will focus more on downstream. are you expecting is down doubts -- standouts? scott: there is not much positive macro. i think what we will be watching of the china oil names is can they sustain the absolute dividend on a year on year basis? any commentary around the macro outlook in china, particularly oil products and chemical demand, is very important. dislocation this quarter. we will be talking about the national pipeline company and the progress the government is making in terms of where that organization goes. started the year with geopolitics and the middle east being front of mine when it comes to pricing -- front of mind when it comes to pricing and now we are looking at china demand being diminished by this virus. what do you expect to be the
most influential price driver? factions,hink opec they still have the meeting march, we hosted middle east calls last week suggesting that saudi are already cutting back and whether they can convince other opec members, i think that is number one. number two, looking at the u.s. oil shale data, we think spending will be down for the industry may 10% this year. , is it really reflecting that moderation and growth. also recovery and demand. there is an argument to say that as we go into second quarter, is brent is still around low 50's, that stimulates demand and we could underestimate how quick the demand recovers.
if you look at events and the oil world over the last few decades, demand can recover relatively quickly. >> scott darling, thank you for your time, jp morgan regional head of oil and gas research. coming up, china think facing a 2 billion-dollar dollar wall of offshore debts due next month and things are not looking good. details ahead. this is bloomberg. ♪
♪ china's most stressed dollar debt facing a major test of their financing capacity next month, over 1/10 of all bonds coming due as the nation grapples with the economic impact of coronavirus. let's get more with our reporter in hong kong. what are we expecting to see in the distressed bond market next month? it is horrendous timing, but set the scene for us. about $20hina is
billion worth of stress dollar 's maturing this year. it needs at least 15%. if you look at the monthly maturity breakdown this year, you will see actually march has the highest debt coming due. due thisillion coming march. usually correlate with signs of stress,, sometimes even default. the interesting thing about this is it is coming at the same time as the coronavirus weighing heavily across the chinese economy. what was already going to be a challenging time looks like it is going to be quite a bit tougher. >> what type of borrowers are we talking about, and how much will
they struggle to pay? what can they do? farms haveout seven stressed dollar debt coming due in march. the majority of those are property companies. property has been badly hit by the coronavirus, so sales are expected to plummet in january and february. it is definitely a tough time. saying that, we are seeing quite a bit of demand for some of china's high yield property developments. bonds have been priced since the outbreak. in real estate, they have ways to monetize. they can sell land and they have different ways of supporting themselves during tougher times. >> what is the government authority doing to support the distressed debt? rebecca: the government has introduced a variety of different measures to help
liquidity in the equity and credit markets. the mostne of interesting things to watch for is they are quite proactively guiding investors to be a little more flexible with firms that might be struggling to repay. be moreis might effective to onshore investors, i think will be interesting to see how offshore investors react to this. europeanan and investors are asked to be more flexible with firms who are struggling to repay the principal on their debt, it might affect the capacity of the authority introducing supportive measures. reporter in credit hong kong. thank you very much. part of china's industrial heartland are returning to work after an extended holiday. let's get to david ingles.
a few companies are releasing plans for the next few weeks. what are we hearing? david: some of them are going to start today and progressively over the next few days, but it isn't clear. guessing, we will be nowhere near full capacity prior to the virus outbreak anytime soon. we have heard several names, and you probably have individual cases where they are not disrupted. example, they came out and said they are set to resume operations at a home appliance plant in china, but i imagine that is exceptions to the rule. it is an operational issue, it is creating liquidity and cash flow issues as well. you have upward pressure on spreads right now because this is starting to show up across
that part of the market. we have to wait and see what happens. theyan sachs are saying will pay attention to how quickly things ramp up, but also pay attention to whether or not infections and the spread picks up more, as they are starting to reopen. more about the special relenting program and what it is meant to do and is it likely to be successful. david: part of it is to help companies, that rebecca was pointing out, with cash flow. ine major banks, local banks 10 cities and provinces. essentially it is the pboc's way to ensure that funds make it into the system. in a few days you get an application and approval. it is as much as 100 basis
points below your prime rate, and this is to make sure that stocks reach businesses that are affected, or businesses at the forefront of the spread of the virus. go, we aree let you seeing a bit of a turnaround in mainland markets. what is interesting to me is we are seeing the small-cap tech heavy index leading the gains here. is this telling us anything special or a normal move we see in the mainland markets? marketsometimes these tend to gyrate on their own. this ise to speculate, my personal opinion, you look at how some of the names that tend benefit from people staying the, you have a lot of department stores, they offer thats like better services
tend to pick up at times when people are not leaving their home. that probably is leading to a tech centric index on the way up. it's not clear what the earnings impact will be. back to my earlier point, the bond markets, the 10 year at 8.2%, the last time it was at that level, china was mired in about a years long battle with deflation. >> david ingles there with a look at the markets. we are seeing a turnaround when it comes to select chinese browse remember you can the recent charts featured on bloomberg tv to catch up with key analysis and save for future reference. it is all on the bloomberg. this is bloomberg. ♪
>> let's get a quick check of the markets across asia. some divergence with the hang seng index falling the most in a week, but as you can see, the china, the small-cap, tech heavy is gaining and rising for a fifth consecutive session, a bit of a turnaround in mainland markets as well, with the shanghai composite in the green. were also sing the risk off sentiment from earlier in the
session retreating a little bit. the korean won paring back some of its losses, while the japanese yen is also paring back some of its strength and is now falling against the u.s. dollar a little bit. ofare seeing a little bit the market divergence, and perhaps that risk off sentiment we had earlier in the session paring back. yeah, let's get you a check of the business flash headlines. hsbc is offering almost $4 billion in liquidity relief to business customers in hong kong being hit by the coronavirus. measures include a repayment moratorium for borrowers with commercial loan secured by property, while trade finance clients -- near an overdraft for six months. hong kong considering loan relief as this hits spending and travel. bp is in talks to delay
shipments of copper concentrate amid construction shutdowns because of the coronavirus. toers may give flexibility discourage them from declaring force majeure to get out of obligations. andconcern about the virus the global slowdown. volkswagen has postponed the resumption of production at some joint ventures and china as the coronavirus continues to disrupt the global economy. has limited travel for employees. untilostpone production february 17 except for one plant and shanghai, resuming work on monday. most production will also restart on monday. germany say dime may announce up to 15,000 --
-- announce up to 15,000 jobs. plan is seen as lowering spending. make sure to watch our special coverage of the new hampshire primary wednesday at 8:00 a.m. hong kong time, 7:00 p.m. new york time. >> that is about it for this hour of "bloomberg markets: asia ." i am haidi stroud-watts in sydney. ♪
>> it is almost 11:00. . am haslinda amin i am paul allen. where entering the last hour of the morning session in hong kong, here are the top stories. aside $10 billion to control the coronavirus as desktop 900. who hits for wuhan as researchers say infections may peak this month. worst-case scenario, slowing economy, rising public debt, and now the virus. the global economy being
weakened and air travel among the hardest hit. this is "bloomberg markets: asia ." ♪ haslinda: asian markets mostly in the red, but china has faced a turnaround in positive territory, up to 10 support percent. let's get the latest on the markets from sarah. of an upbeat tone across markets, while off the lows of the day. mainland china stocks now in the green, up by two tents of a percentage point in holding above the 200 day moving average. this is on strong volumes. volumes for the csa 300, trading
volumes, 60% higher than the average this time of day than the past 30 days. you look at the hung saying and nikkei, both of well off the lows earlier in the session. to s&p 500 futures pointing a higher open, up by two tents of a percentage point after falling friday for the first time of the entire week. the fx and commodities markets are also displaying a bit more of a positive tone as the session does continue. the aussie dollar up by half a percentage point. the best performing currency today. g10 performing currency today. copper futures are higher right a fourth day in five, after a record streak of losses for 13 days.
gold roughly flat on the day, but still lower and not really getting too much of a dig. paul: thank you so much. toll from theth coronavirus outbreak has reached 910 people as we enter what many experts see as a crucial period in determining the trajectory of the virus spread. vonne man is y tracking the virus in hong kong. what is the latest? the number of infected cases is now more than 40,000. both numbers have surpassed what we saw during the 2003 sars epidemic. fresh cases over the weekend in japan, singapore, and in europe in particular, there is the concern of a super-spreader fears this after we saw a
handful of cases in france, spain, and the u.k. this traces back to a u.k. man who apparently attended a conference in singapore and then came into contact with people at a french ski resort. this goes to show the challenge and containing the virus, the spread of local transmissions, and the of carrying it around the world. similar to the sars epidemic at, we had one medical doctor infect multiple people. that remains a big threat. as you mentioned, there are signs of stabilization, the number of confirmed cases rose only 8% over the weekend, the lowest yet. also the number of suspected cases came down quite a bit as well. those numbers, the pace of those infections matching what the models are saying, that we may hit a peak by mid-to-late february, but keep in mind at
that point, medical experts say that one in 20 people in wuhan could have contracted the disease, 500,000 people potentially. what is the latest from the world health organization? we know there is some concern about the virus being spread by people. yvonne: we heard from the chief of the who saying we could be at the tip of the iceberg as far as how far the outbreak has spread. also when it came to the detection of a smaller number of cases, they suspect we could see more widespread transition in other countries, and telling all countries to step up efforts in the arrival of the virus. you mentioned about the team of medical experts from the who now heading to china feuded china itself has pledged to spend $10 billion in this fight with the coronavirus and they are
reaching out to other nations for medical supplies. the concern now is the local transmissions but not quite yet have we hit a community outbreak, it is still too early to tell. elina, let's get to the inflation numbers that came out a couple of hours ago in china. we see pork prices starting to spike. what else are you seeing? selina: we saw china's consumer inflation rise to the highest since 2011. as you mentioned, the pork prices surging by a record. those numbers were boosted by seasonally higher man because of the lunar new year holiday. they are forecast to continue to rise because of week supply and experts expect china to export the deflationary pressures because locally it will fall. they broke a six month streak of decline, but the reprieve is not likely to last long given that
commodity prices have been tumbling because of the coronavirus. economists have been significantly lowering their economic forecast for first-quarter gdp, estimating it could fall to 3.8% from 6% at the end of last year. called and predicting a sharp slowdown to 4%. -- goldman addicting sharp slowdown to 4%. lower interest rates, liquidity boost, and the central bank providing a special batch of relenting funds today for companies impacted by the virus, and expedited approval process. nine major banks and others qualifying for the loans. it puts in perspective, this is still a measure, a targeted easing here, and the pboc is trying to avoid significant financial risks. haslinda: have we seen any fallout in the banking sector? selina: it is certainly putting
more stress on china's banking sector that has already been battered. last year we saw the first seizures into decades and bailouts of key lenders. they are bailing out small businesses, rolling over debt, and waiving fees. in a worst-case scenario, this could cause bad debt to balloon by 5.6 trillion. that is adding to the already massive two point 4 trillion debt of nonperforming loans that chinese banks are already sitting on. you have analysts predicting that many more firms could go under, could be unable to repay their loans if the virus continues to spread and put more pressure on those medium-sized businesses. i want to point out, a major difference between the situation we are in right now compared to 2003 and sars, is there is not enough to support an aggressive banking that stimulus since
chinese banks don't have the same ability to replenish capital. their profitability has trended downward in recent years. paul: the chinese government has already spent billions in the wake of the crisis. have we seen anymore measures today to contain the outbreak? selina: the chinese government saying they have spent billions of $10ars, of a total billion they have pledged to contain the outbreak. one province in particular is dealing with a shortage of doctors and medical equipment. that is despite the chinese entirelyt building two new hospitals in a matter of days and sending 10,000 medical workers there. you have the government pushing for medical equipment and drugmakers to be up and running back to full speed as soon as possible. the government is saying they will help company secure funding, licensing, and even raw
materials if they need the help. right, thank you. let's get a check of the first word news with su keenan. su: were going to start with the latest on the election front. pete buttigieg appears to have sealed his victory in iowa, after the state democratic party released corrected results from the disputed caucus. has 14 national delegates from the state compared to 12 from bernie sanders. the sanders campaign is demanding a partial re-canvas or recount of the vote and the associated press says it still can't declare a winner because the result might not be fully accurate. this all leads up to the presidential election. meanwhile, the arab world dialing back president -- criticism of president trump and maintaining calls for palestinians -- no longer
condemning the u.s. proposal directly. been circulated weekendonesia over the regarding the integrity of palestinian land. a tragedy in thailand where authorities say 29 people were shot dead and 57 wounded after what is being called the bloodiest mass shooting in the country's history. authorities say the army sergeant who carried out the shooting rampage was angry about a financial dispute and was eventually killed after a lengthy standoff with police. northeastn a district of bangkok. the prime minister said the incident was unprecedented in thailand. the association of asia-pacific airlines says it is very concerned about the impact of more travel restrictions due to fears from the coronavirus.
the director general told bloomberg that although the measures are well-intentioned, the economic impact should not be underestimated to the size of the travel industry in asia. >> if you take all of asia-pacific it, about one third of global travel, and china would be almost half of that figure. so overall, if china is down 50%, that would be about 25% impact on the whole of asia, and china will be down more than that. were looking at a significant fall off. su: global news 24 hours a day on air and on quick take i journalistsrom 2700 and analysts in more than 120 countries. haslinda: thank you. coming up this hour, we are atned by a president and ceo asia's biggest air. next guest tells us
haslinda: welcome back. this week could be crucial to china's fight against the to seeirus as they race if beijing's measures are paying off. our guest has been crunching the members and says if the timeline of the current outbreak is similar to sars, markets are due for a sharp rebound next quarter. let's bring in the head of aipac research. good to have you with us. if you take a look at sars, it took six months, but two months into this coronavirus, the number of deaths have already
exceeded sars. how do you make the comparison? olivier: obviously is not exactly the same thing, but we have an example to use. the first thing everything is doing is looking at a historical stress test during the sars period, where we had a best first quarter and we were down about 12%, that the second quarter we were up 20%. i think already today we are seeing similar types of behavior, markets are calm, correlation is not as high as it was even in august, when we were worried about trade wars and stuff like that. volatility is nowhere near where it has been in recent risk events. some are taking it in stride, they are more bullish than in q4. themselvessitioning for strategy and not dumping anything. we have some markets
some say in lila land and we have the bond market on the opposite side and the fx in between. what are the different asset classes telling you? olivier: that's one of the big difference with sars, had positive interest rates. people had a choice, they could put their money somewhere else in the stock market, so they bought bonds because they were yielding nice interests. today it is mostly negative interest rates and there's nowhere else to go. but you go defensive and you buy, news that have low leverage, that are profitable and maybe have less exposure to the global supply chains. -- avoidfor companies tourism, obviously. this is where it plays out. the other issue for investors is the earnings season just finished. going to hear about this for another three months. what we have is what is on the front page of the papers,
geopolitics, things like that, and then also the trump factor. donald trump had a huge victory last week at home, maybe he will want to take that nuisance of pride and try something. who knows? he has done it before, and when his opponents are week, -- are weak, that's usually what he likes to strike. there could be something out of the left field for politics. paul: you say markets have been taking this in their stride, but you describe buying defenses as well. if people were looking to buy a dip, we've seen markets rally hard. have investors missed their opportunity if they were looking for that? olivier: you've got to make a difference between investing and gambling. if you want to do a pond, because in the past, these crises are short-lived and there is a big rebound afterward, so you can go for a pond and do it
but you're doing it without data, forecast, or fundamentals. you have toing and own that afterward. most investors look to a fundamental approach and say we don't know how big this is going to be. analysts are in the process of trying to identify which customers -- companies have a flexible supply chain to get around delays and further shutdown of plants in china. all of this background work is going on right now and there's not enough information for people to go back in. we are seeing them play defensive plays and go for dividend yield stocks, for profitable companies. but they are not selling everything. we are not seeing the panic we saw in the past. the rebound will be there, but we did not go down that much. there are still some ways to go.
we were up 30% last year, there are plenty of profits. paul: i just want to get your of a familiar bit subject, the amount of debt carried in china. i want to bring up this chart, the debt has always been there, but in the context of coronavirus, it is piling up, are we looking at trouble b ring -- trouble brewing? olivier: the debt has always been there, and as long as the economic outlook kind of guaranteed the cash flows would come in in time to pay for the debt, it was less of a worry. now again, analysts will start saying, which companies are going to be so affected that the cash flow will not be there? some of the debt is due very soon. there will be that kind of decision-making and specific stocks playing, but if we look at the overall numbers in the
market, volatility is still low. and in china, volatility is higher than anywhere else and correlation is higher than anywhere else. things have gone up a little bit in the background, which means the cost of being wrong is higher than it was in q4 or q3 last year. this is also something to keep in mind if we are wrong on this, and if it last longer, and if it is more disruptive. the cost of being wrong is higher now. haslinda: we have to leave there. looking at the chinese market, giving up gains, a roller coaster ride. thank you so much for your insight today. -- keepto cap up-to-date with the coronavirus story. your bloomberg terminal and you will find our quick take lending page with the latest global figures and headlines from the bloomberg news room, as well as how specific companies
♪ let's look at how chinese markets are trading right now, the shanghai compass it flipping into negative territory, off a -- shanghai composite slipping and theative territory csi 300 off about one quarter of 1%. stocks in shenzhen looking flat. ext index looking flat. lingering concerns about the supply chain in china. haslinda: let's get more with david ingles in hong kong. any specific moves in the market today? we are looking at how china is on a roller coaster ride. david: really has been.
i want to pick up where paul left off, sort of the tech play in chinese markets. it is twofold. you have a lot of the services that are seeing a spike in demand laying out across these markets. pushing 80 in hong kong, a lot of the retailers, department stores listed on the mainland offering online deliveries and seeing pressure. that is a positive sign. the other signs of the disruption taking place. a lot of heavy pressure today. [indiscernible] it is giving the market a reason to avoid the stoxx altogether. stockng up a lot of the
s, the supply chain disruption. it will be interesting to see how the letter part manages, especially from a cash flow standpoint. paul: we have reports that macau casinos might be cutting dividends. david: it is a note out of jeffries, they are essentially saying the possibility that casinos and utilities in hong kong might be potential dividends to reduce on the back of the other port i was mentioning earlier. the companies are keeping cash closer to the chest. there is more cash flow management right now because of disruption, and a lot of the vehicles i imagine her thinking right now, just trying to be notervative given it is entirely certain when things go back to normal. that is the casino and utilities
space. i'm going to bring up a story that just dropped on the bloomberg as well, about tech companies looking at a nightmare scenario. i recommend everyone read that as well. , a big contract manufacturer for apple. with factories coming back online, their priority is to they keep the virus and check in these manufacturing towns. the objective is to keep infections at zero. that goes back to the cash flow question as well and how these companies are maybe looking to manage a lot of what is going into the balance sheet. haslinda: thank you for that, a down day for asia, china on a roller coaster ride. president and the
you are looking at live pictures of the lion city. currently down half a percent in the trading day. the coronavirus is a major test of the country, residents in singapore hoarding while shopping in the supermarkets and supermarkets are imposing purchase limits on certain items like toilet paper. let's get the first word headlines with su keenan in new york. su: we will begin with the latest on the coronavirus front. is world health organization
leading an international team of medical experts china in order to combat the spread of the virus. more than 900 people have died there and the number of cases have exceeded 40,000. more cases have been reported in singapore and japan and europe over the weekend. spending $10a is billion to combat the outbreak and is calling for global support with medical supplies. a cruise ship corned heat in hong kong has been released after all passengers and crew were found free of the coronavirus. it had been locked down since talking in the city on wednesday after three chinese passengers who left the ship earlier were diagnosed with the infection. sayver, hong kong officials tests were ahead of schedule and all proved to be negative. t run is proclaiming --
building short range ballistic missiles. the fuselage is made of a composite material to reduce weight. the rocket can hit targets 500 kilometers away at a fraction of the cost of its predecessor. to baseball, the new york mets empire is looking for another buyer. a deal with a hedge fund investor fell apart. we are told this time there will be no preconditions over ownership, meaning any new buyer can take control immediately if they have the money. it could push the sale price above the previous offer. the political fate of india's capital new delhi will be
revealed tuesday, when state election results will be announced, and almost 15 million voters are choosing 70 members of the legislative assembly. the prime minister's party faces an uphill struggle to reclaim the region in the election, which has seen another test of the ballot box of a controversial, religion based citizenship law. global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm su keenan and this is bloomberg. paul: thank you for that. let's take a look at how we are trading on the markets at the moment. in australia, a little weaker by 1/10 of 1%, and hong kong weaker as well. everything is weaker by varying degrees, the nikkei off 1/10 of 1%. the markets giving up some of the gains we saw last week. over to the indian stock market open, we have nifty futures
looking in flat territory right now. the indian 10 year yield also looking flat. if you want to buy indian rupees you will get 71.3 of them for u.s. dollar. not a great deal. let's get the latest on the markets and get over to sarah. is there anything we can point to as new information for the markets's extended decline today? areh: not necessarily, we in a volatile. -- a volatile period. there has been some reason to believe that we might see a peak in the spreading of the coronavirus this month. you also have the pboc offering the first batch of special relenting funds today, but at the same time, there have been some negative headlines as well. theave seen stocks across
asia region really faltering today, moving either which way. higherx300 was trading earlier but took a sharp drop lower and you can see the csi 300 trading down by nearly half a percent at this point. if you break down the csi 300 and look over the past half an hour, what was driving that lower, it looks to be technology stocks, health care stocks. however, there was not anyone individual headline on this move. you have to put everything we are seeing and context. there are still a lot of questions overhanging investors and they are to figure out what is the growth outlook, what will actually look like because of the coronavirus. haslinda: how are investors positioning themselves in the wake of this virus? interestingly, we see a
very risk on tone, and particularly toward the united states good on -- united states. on the bloomberg you can look at etf funds through last friday and if you look at the funds that took in the most cash, it was the s&p 500 broad etf, one you are looking at here, combined they had a record. we also saw another taken a record inflow, a fund that tracks high-yield corporate bonds. also on the risk of spectrum, the triple cues that track the nasdaq, taking in more as well. on the flipside, investors pulling money from japan focused funds. we have also been issues here there with earnings and growing corporate profits. interestingly enough, we still see investors flocking to risk and very much liking the u.s. over the rest of the world. paul: just quickly, what is the message from the commodities
complex? sarah: a confusing message, we've seen a lot of volatility today, and it relates to oil. opec will supposedly not hold an emergency meeting, we have seen wti crude oil fall below $50 a barrel, and you can see that brent has bounced back a bit but still lower on the debuted i will say, copper up a fourth day and gold is flat. you see a little bit of a touch on risk. haslinda: sarah, thank you for that. now more than 70 international aviation companies at the singapore -- aviation company's withdrawing from the singapore embraer will be there. they claim more than one third of delivery last year. let's bring in the president and
ceo. once every two years, good to see you. the coronavirus is front and center, how do you expected to impact sales this year? john: as we think about deliveries, let's think about it from a revenue perspective. we don't have aircraft delivering to china and the first semester of 2020 so it won't impact our guidance. in addition to that, we don't have pier 1 suppliers. is, as wethe guidance talk to the pier 1's and they talk to the factories in china, we not seeing movement what we expect to get out of china in terms of inventory for this year. surerms of sales, for there is a limited travel. when we think about travel in and out of china right now, just to frame it and give you specifics, china equates to, accounts for 60% of global travel. in and out and within
china. 25% of the schedule has been brought down since the coronavirus. on the ground is more extreme. 50% of the operating flights have been canceled. that percentage may grow. nott of folks simply are traveling not only in china but southeast asia. we are just hoping we get through this in the next few weeks and get people back on the road. haslinda: is it even realistic to think the aerospace sector will get back to growth in 2020? that had been the expectation. that the governing body most airlines are member of, the forecast for the asia-pacific region, growth of 4.2% in 2020, that was the protection issued at the end of 2019. overnight, the pendants -- now suggesting that could turn into a -6%.
we just don't know as we sit here today. i think it's fair to say pragmatically that growth of up to 5% in the asia-pacific region is not going to happen in 2020. haslinda: embraer is mulling , a partnership with boeing, worth $4.2 billion. no one else out there and embraer has not given a number, can you give it a number? john: the $4.2 billion is the investment in cash that embraer -- excuse me, boeing will be paying embraer shareholders for an acquisition. -- separately, the acquisition were looking at making if we go forward in the fourth quarter this year, we haven't share that with the market, but between what we do and the engine manufacturers do, it is a multibillion-dollar
number, but not a number my board has an appetite to take if the venture doesn't go ahead. haslinda: no boeing, no turboprop? john: right. haslinda: what is the business case? john: very robust. particularlys, atr, 50% owned by airbus, and the q2 hundred, owned by a company called dehavilland from canada, they have four fist of ths of the, -- 4/5 market and airbus owns 50% of atr. those incumbents are flying platforms that are 30, 40 years old. old technology, loud, noisy in the cabin, earning more fuel than they need to end not comfortable. we have the capacity and capability to bring a disruptive
attitude to the marketplace, a state-of-the-art turboprops. we have been building turboprops for 50 years. this technology and we know we could bring some thing special to the market. we have some more advisory boards we need to do with airlines this year and then we bring our final recommendation to the boards. haslinda: we know that this is pending regulatory approval and where are you with this? john: we've made good progress, there were ten jurisdictions around the world, including u.s., brazil, and japan, i mentioned those because they have their own oil manufacture. we have secured nine of the 10 antitrust approvals. without any conditions. unconditional approval from those nine. we are working now with the european union, the commission in brussels, to get the data they need so they are positioned
to make a final ruling. haslinda: are you concerned? is there a reason to be concerned? this is the home of airbus, does it complicate anything? john: as a proud european myself, i have the utmost trust in the commission. the commissioners looking at deals all the time, so i don't believe the airbus being a domestic manufacture -- manufacturer and the eu will be an issue. overlap in competition is what they are looking at. let me give you a statistic. -- excuset aircraft me, my biggest aircraft, is 20% smaller than their smallest aircraft, the max seven. it can fly 50% longer than my biggest aircraft. those are the key metrics. there is no overlap. haslinda: this is the market
dominated by atr for the longest time. how much of a game changer willoughby? -- will it be? john: on the turboprop side, a massive game changer. we believe we could stimulate atr to make a move and maybe generate their own new aircraft. the winner here would be customers, because they want competing platforms. the winner also would be the climate. we will bring to the market and aircraft with less co2 and noise omissions. i expect our disruptive move will force them to make a move as well. curious, have the european airlines given any feedback? what has been the reaction? john: there was a big conference in dublin in mid-january as there is every year, and through the course of the interviews i was doing over there, some on stage and some bilateral, we were requested thereafter to get
updates for the airlines. airlines say we weren't aware you were in phase two, tell us what is going on. as much as we want to respect the integrity of the process with the commission, so were not divulging confidential information, but we said we are in stage two of their analysis. what the airlines want to do with that information is up to them, but the airlines want clarity. they want to understand what the competitive dynamic is going forward. right now, the competitive dynamic is favoring one party. a220.ompeting against the but ig data shows that, compete against the a220, that looks like it will be almost wholly owned by airbus. in the back i am fighting with a hand knife and they have a bazooka coming around the corner. haslinda: very quickly, and terms of regional jets, the
numbers we are looking at for 2020 would be? in this region. john: over the next 20 years, ing 2000 regional jets. this is the biggest regional market in the world. it counts for 28% of the deliveries over the course of the next 20 years. europe is never to at 27% and the u.s. is 26%. we are very focused on the asia-pacific over the next couple of decades. haslinda: thank you, john. commercial aviation president and ceo. we have some breaking news. paul: that's right, some comments from china's ministry of commerce, saying china seeks to minimize the virus's impact on foreign investment and the country will help foreign
♪ indian markets have just opened, let's get to mumbai. take us through what to expect from today's session. how are things looking? start, and negative note for this week, but last week was good for indian markets, they rebounded to nearly 4% viewed in the red, you're looking at frontline indices, and also for the broader markets, the nifty
500 opened in the red. toot of stocks are reacting the earnings markets from friday and over the weekend. a lot of stocks reacting to earnings season. global factors going to the numbers we are getting with regards to coronavirus, crossing number.s number -- sars paul: you mentioned earnings, what stocks have you been watching? i think the numbers will below what was expected, and [indiscernible] disappointed. they lost for the first time in 16 quarters, and posted the worst ever performance. but brokerage as of the view
that the second quarter be better because of prices in europe and india moving higher. stocks reacting negatively, but a strong performance operationally. expanding and good performance across all markets. they have retained the by rating. [indiscernible] kimi clearly seen in the numbers and the street also rewarding the stock, up about 4%. paul: thank you so much for joining us. china's banks are bracing for the worst case scenarios outlined in the pboc's annual stress tests as the coronavirus spreads. annual gross going to as much as 4.15%. -- growth slowing to as much as 4.15%.
regulationsial reporter joins us. analysts are saying the outbreak could send first quarter growth test,than the stress down to 3.8%. how does that change the picture for the banks? stabilityhey did the report last year, outlining a worst-case scenario, probably never imagining to come close to it. s&p crunched the numbers, and it could mean 800 billion in bad loans if the worst case scenario plays out. that is more than twice the current amount outstanding. it is a huge number. that they'rer already having to deal with. it's another factor weighing on chinese banks this year. what kind of support
are banks for die -- providing during the epidemic? central authorities have asked banks to support smaller firms, especially virus stricken regions. they have been asked to provide rate, 0.5% percentage points lower, and they later asked to give some of the firms, loans at 1.6%, of course with government subsidies viewed -- subsidies. you take into the risk of bad loans and providing loans lower than 5% is not profitable for them. what is the worst case scenario here? could we see some businesses or smaller banks fail? inille: certainly last year
an already stressed environment we saw a bailout more than three decades viewed also, -- decades. also we expected some lenders to be rescued in a variety of forms. with increased stress, it's something we expect to continue to happen and it certainly will affect the profitability of even some of china's largest banks. haslinda: china's banking industry taking a big hit. lucille, thank you. remember, bloomberg users can interact with charts using g tv . charts, check out key analysis. this is bloomberg. ♪
let's do a quick check of the latest business flash headlines. reports from germany say daimler may announce up to 50,000 job losses when earnings are released tuesday . this comes after the company had already decided to cut 10,000 stocks worldwide. they are cutting more than $1.5 million in costs. volkswagen has postponed the resumption of production at some joint ventures in china as the coronavirus continues to disrupt the global economy. vw cites limited travel for employees and the extended break for the lunar new year. they postponed production for seven days until february 17. this except for a plant in shanghai that will resume work on monday. airbus is in talks to
buy a stake in a jetline program according to people close to the company. announcedent can be this week. they will invest more than $2 -- $2 billion. paul: ghb is in talks to relations of copper concentrate amid shutdowns because of the coronavirus outbreak. ony may be given flexibility deliveries to avoid force majeure. there have been delays because of the virus. that is it from "bloomberg markets: asia." i am paul allen.
>> this is bloomberg daybreak: asia middle east. china sets aside $10 billion to control the coronavirus as deaths top 900. the world health organization -- past the briefly falls $50 a barrel mark. that as hopes for an extraordinary opec plus meeting feign. stocks falling for a third straight session. the arab world dallas back criticism of president trump's middle